7 Tips for Creating a Small Business Budget
Happy Thursday guys! I am sorry that I have been behind on blog posts.. (I’ve been battling a cold). I am back today with yet another awesome blog post for you that features tips on creating a small business budget for your company.
Maintaining a small business and growing it to succeed can be a huge task. This is especially true for newbie small business owners. However, you can give your business a head start by following the steps for creating an effective marketing plan I shared with you in the previous post and creating a small business budget.
How Do You Create a Small Business Budget?
Creating a budget plan for your monthly home expenses can be easy. Nonetheless, the following tips will help you learn more about your business and create a budget plan that will work toward maximizing your output, saving more dollars, and eventually growing your business:
1. Research Common Budget Plans in Your Industry
If it’s your first time creating a budget plan, it’s best to learn the industry standards. Find out what the common costs and revenues a business such as yours get by researching online, in a local library, and checking out the IRS site. You can also ask other small business owners, specifically those that work in a niche similar to yours.
2. Estimate Your Average Revenue and Expenses
Even if it’s your first time creating a budget plan, you’re probably already familiar with the basics of your business. That is to say you might already have an idea of the supplies you will need to buy, how many people you need to hire, how much you will need to pay for your office rent, electricity, and the like. Similarly, you will probably already have target and/or expected revenues per month or year. With this basic knowledge, estimate your average revenue and expenses and use it as basis for your budget plan.
3. Add Expense and Profit Margins
Although you might be sure that your estimates are right on the spot, it will still be advantageous to add expense and profit margins. This way, you will still have enough money for additional and emergency expenditures.
4. Do Some Window Shopping and Price Comparison
Before you begin spending money on your business processes, look for suppliers, contractors, and stores that offer products and services needed to operate and maintain your business. Ask necessary questions like discounts for bulk orders, emergency needs, and installments. Evaluate the advantages and disadvantages that each provider poses, and choose which best match your needs and budget.
5. Prepare and Use Spreadsheets
To make sure that everything is accounted for in your business, you have to know just how much is going in and out of your business. You must know how much the actual revenue you get is, how much you’re spending on supplies, how much you’re paying employees, and the like. To do this, prepare spreadsheets, with all expenses and revenue factors identified, and list the exact numbers you shell out and gain. Ideally, you should do this every day to monitor the flow of money within your business.
6. Adjust Your Small Business Budget Regularly
Just like market trends keep on changing, your business needs, expenses, and revenues will keep on changing as well. For that very reason, it’s crucial to monitor and evaluate the money flow in your business and adjust your budget accordingly. It’s a must to do this on a regular basis (e.g., once a month, once every quarter, etc.)
7. Consult a Professional
Sometimes, we just need to admit that we can’t do everything by ourselves. If your hands are too full with all the tasks that need to be done and goals that must be achieved for your business, then it might be beneficial to get help from a financial adviser. A financial adviser will help you:
- Get a bigger and better view of your financial status and future plans
- Better identify possible risks, problems, and solutions
- Create a more thorough financial plan and business budget
Extra Tips for Sticking with Your Small Business Budget
Following your budget plan can be tough, especially when you don’t have a big sum to start your business with. Nonetheless, you can guarantee that your budget will be sufficient by observing the following tips:
- Never buy on impulse.
- Always compare prices from all possible and existing suppliers.
- Don’t be shy to ask for discounts, especially from a supplier you’ve been continuously getting products and services from.
- Try to cut costs. Recycle papers, get skylights installed, and choose to hire contractors instead of full-time employees, if you don’t have too many tasks to finish.
I hope that the information that I’ve shared with you today will get you started with creating a budget for your business. I invite you to leave feedback and would love for you to share this post with others.